Silverlight's End?

The CEOs of Microsoft and Adobe have held secret talks about combining their strengths to go up against Apple's dominance in the mobile space, according to a recent report.

Microsoft already has a media player called Silverlight, which competes with Flash, but it has not gained prominence in the market.

Both companies' products compete against programs using Sun Microsystems' Java language, now owned by Oracle Corp (NASDAQ:ORCL), and the emergence of the latest Internet standard HTML5, which promises to eliminate the need for separate media players when viewing video on the Web.

One analyst poured cold water on the report, saying the talks concerned products, not deals.

"Adobe insisted Microsoft abandon Silverlight and instead use Flash," Trip Chowdhry at Equity Research said in an e-mail, citing industry contacts' guess at what happened in the meeting. "Probably no decision got made."

A deal would mark a major offensive in Microsoft's bid for a larger share of Internet media and mobile platforms, as it gears up to launch its new phone software next week and eyes the introduction of Windows-based tablet computers to challenge the iPad in the coming months.

It would also mean an alliance against Microsoft's archrival Apple, which has been at odds with Adobe over its effective ban on Flash-based applications on its iPhones and iPads.

Such a big deal would be rare for Microsoft, which has almost $37 billion of cash and short-term investments on its balance sheet, but has been shy of big acquisitions since its failed $47.5 billion takeover of Yahoo Inc (YHOO.O) in 2008. Its largest acquisition was the $6 billion purchase of Web advertising firm aQuantive in 2007. (Reporting by Edwin Chan and Bill Rigby; Editing by Leslie Gevirtz and Richard Chang)